The Effects of Reforming the Chinese Dual-Track Price System

Substituting (21) into (20) gives

dP x

=≡ = - +
dp x

⁶p
x

J dp

Substituting for dp

from (18) and using x = x^s gives

dP
dP)

^χ________1________Γ_s_ ^χ/ s _ ⁽p^-Px ʌ

_xS- (_x-x∖^-_χs S _rΛ⁶P m ⁶^m⁶P)

X y x x χ x ^m x p p IIU

> 0.

(23)

Differentiating (6) w.r.t. x, we obtain

dP
dx)

dp
dx

x) dp 1 x

⁺ ~μ ⁺ — (P ^- P) ⁺ (P ^- P) —2 ^xP
x dx x (x)2

dp
dxP

-x

⁶P
x

dp
dxP

¹⁽P ^- P).
x

Substituting for dp∙ from (19) and using x = x^s, we obtain

dP
dxP

S — (x — x)x_m — xp

xp (6P

(p — p)p

⁶m⁶p)

< 0.

(24)

Proposition 3

Differentiating (8), and using Roy’s identity,

^dv = Vp^dp + v_m ^dpp — Λ P = -v_m ^dp (x — x) + x

dp> dp ∖Pp J dp>